What are the Main Taxes Applied to Companies in Turkey?

Turkey has one of the most competitive corporate tax rates among OECD member countries. Turkish corporate tax legislation is regulated with clear, objective and international standards. Turkish tax legislation can be grouped under three main headings: income taxes, expenditure taxes and capital taxes.

What is Income Tax?

Income tax is a tax on income. Income taxes in Turkish tax legislation are personal income tax and corporate tax.

What is Individual Income Tax?

Income is the net amount of earnings and revenues earned by a natural person in a calendar year. Income of real persons is subject to personal income tax. An individual's income may include one or more of the income elements considered; agricultural income, commercial income, salaries and wages, real estate capital gains, securities capital gains.

Personal income tax rates vary between 15% and 40%. The personal income tax rates for 2021 are as follows:

Income Margins (TL) (Employment)	Percentage %	Income Margins (TL) (Non-employment)	Percentage (%)​​
‘till 24.000	15	‘till 24.000	15
24.001-53.000	20	24.001-53.000	20
53.001-190.000	27	53.001-130.000	27
190.001-650.000	35	130.001-650.000	35
650.001 and higher	40	650.001 and higher	40

What is Corporate Tax?

In the event that the income elements defined in the Income Tax Law No. 193 are obtained by the institutions, taxation is made through the legal personality of these institutions. Corporate taxpayers defined in the law are capital companies, cooperatives, public economic institutions, economic enterprises belonging to associations and foundations, business partnerships.

The corporate tax rate levied on commercial profits in Turkey is 25% for 2021 and 23% for 2022.​

What is Expenditure Tax?

Taxes on expenses are taxes on the expenditures of real and legal persons. Value added tax, special consumption tax and stamp duty are examples of such taxes.

What is Value Added Tax?

Commercial, industrial, agricultural and independent professional goods and services; Goods and services imported into the country and all deliveries of goods and services generated through other activities are subject to VAT. VAT rates applied in general; 1%, 8%, and 18%.

What is Private Consumption Tax?

Private Consumption Tax is an expenditure tax on certain goods or products on a fixed or proportional basis. There are four main product groups subject to PCT at various tax rates:

• ​Petroleum products, natural gas, lubricants, solvents and solvent derivatives

• Automobiles and other vehicles, motorcycles, airplanes, helicopters, yachts

• Tobacco and tobacco products, alcoholic beverages

• luxury goods

Unlike VAT, which is applied on every delivery, PCT is applied only once.

What is Banking and Insurance Transactions Tax?

Transactions made by banking and insurance companies are exempt from VAT, but these transactions are subject to the Banking and Insurance Transactions Tax. This tax applies to income earned by banks, such as interest on loans. The tax rate is usually 5%, but for some transactions, such as deposit transactions between banks, it is 1% for interest.

What is Stamp Duty?

Stamp duty is applied to various documents including contracts, debt securities, equity participations, letters of credit, letters of guarantee, financial statements and payrolls that document official and legal transactions between individuals. Stamp duty is levied at rates ranging from 0.189% to 0.948% of the document value, and is also collected as a fixed (predetermined price) for some documents.

What is Capital Tax?

Wealth tax is the tax on the total of personal assets. There are three types of wealth tax:

• ​Property tax

• Motor vehicle tax

• Inheritance and gift tax

Buildings, flats and lands owned in Turkey are subject to real estate tax at rates ranging from 0.1% to 0.6%, and 10% of this accrued tax is paid as contribution for the Protection of Immovable Cultural Heritage. Motor vehicle taxes, on the other hand, are collected every year in the amount of fixed prices determined according to the age and engine volume of the vehicles. Inheritance and gift taxes are collected at the rate of 1-30%.​